Bank Mortgage Originations Jump 32% in Second Quarter

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Following one of worst quarters in six years, federally-insured banks and thrifts experienced a rebound in retail mortgage originations in the second quarter.

The Federal Deposit Insurance Corp. reported Thursday that insured depository institutions originated $83.6 billion in single-family loans in the second quarter, up 32% from the prior quarter. First quarter retail originations totaled just $63.2 billion — the lowest since 4Q08.

The FDIC also reported a 42% jump in mortgage banking income in the second quarter over the prior quarter. Noninterest income from the sale, securitization and servicing of mortgages totaled nearly $5 billion, up from $3.5 billion in the first quarter, based on data reported by 970 banks and thrifts.

Insured depositories that originate more than $10 million in residential loans a quarter are required to report mortgage origination data, as do all institutions with $1 billion or more in assets.

Separately, a new Compass Point Research and Trading report shows the median gain on sales margin was 1.41% on the second quarter. Analysts at the Washington research firm expect the average gain on sale margin will be up 40% in the third quarter. "Gain on sale margins in 3Q14 should be some of the best we have seen in past year," according to the Aug. 29 report.

Meanwhile, mortgage originations are still at very low levels compared to a year ago when refinancing boom was still going strong.

Retail originations at Wells Fargo totaled $27.2 billion in the second quarter, up from $21.2 billion in the first quarter, but down 59% from a year ago, according to National Mortgage NewsQuarterly Data Report.

The second largest retail originator, Bank of America, reported $13.7 billion in single-family originations for 2Q14, up from $10.8 billion in the prior quarter, but down 49% from a year ago.

Meanwhile, banks and thrifts are becoming a little more comfortable when it comes to lending to homebuilders. FDIC data show insured depositories held $48.2 billion in one-to-four-family construction loans on their balance sheets as of June 30, up from $40.7 billion one year ago.